Physician Challenges in 2014 – Payers

We have told you about the physician’s need for time management and the issues with upcoming government mandates. But when it gets to the Payer issues you have to wonder if the true intent with Obamacare is to make life so miserable for a doctor that he or she will quit (or at the very least, leave private practice and join a group or hospital).

Payers have been through their own wringer since the implementation of Obamacare began last year. Not only has the implementation schedule been changed repeatedly, but HHS also told insurers to continue to pay claims on policies they had to cancel (for non-compliance with Obamacare benefit rules) even though they might not have a signature from a patient on a new plan, and trust that the government will pay them in the future. So now the government is not telling companies how to proceed (since there were no details delivered with this “Suggestion”), only that they must comply, or presumably face trouble getting their money.

Many of the larger insurance plans in general, and UnitedHealthcare in particular, have taken measures to comply by implementing a radical reduction in the number of physicians in its network. Since October of last year, United reduced its physician membership by 52,500 (from a total membership of 350,000, or about 15%). In addition, doctors now complain that the insurance companies are making the decisions of which physician will see the patient, which medicines and tests are approved and how long a patient can stay in the hospital. Unless a doctor focuses on strict metrics of cost control (and less on quality metrics), they can find themselves dropped by one or more of the insurance companies from which they receive income.

Another big payer problem is prior authorizations. Long a costly issue for physician offices which have to file requests for treatments and procedures and submit medical records so that the insurance company can approve them. While there is merit in the approval of health care, these “prior-auths” as they are known take significant clerical time in the doctor’s office and are not reimbursed except through the charge structure. The American Board of Family Medicine estimates that a prior auth costs over $3,400. And since the payer controls the prices it pays, it also controls how much physicians receive for administrative work. The squeeze is on.

As we said intially, it seems that the intention of the new law is to drive a wedge between the physician and the patient regarding proposed treatment and replace the physician’s decision making activity with that of an insurance employee. This is the same kind of system that produces 5-12 month delays for treatment in places like Canada, the UK and France. So if physicians were not already discouraged enough about the negative impact of the Affordable Care Act on their ability to address a patient’s condition proactively, now they can be removed from the entire equation if they don’t tow the insurance company line on costs. This all actually has a positive impact on medical tourism because many people don’t want to wait for treatment, feel more distant from their primary care physician and specialists, and are searching for a high-quality healthcare substitute that is available in a much quicker timeframe.